Consumer inflation excluding interest on mortgage bonds (CPIX) — the measure used by the South African Reserve Bank (SARB) for its inflation target — is expected to have increased at 12.9 percent year-on-year in July from the all-time high of 11.6 percent registered in June, an I-Net Bridge survey has found.

This will be the sixteenth month running that CPIX has been above the six percent upper target limit, and will be well above the 6.5 percent seen a year ago.

The previous all-time high for CPIX was the 11.3 percent set in 2002.

Forecasts among the eleven leading economists surveyed ranged from 11.2 percent to 13.5 percent, but ten of the eleven see it above last month's level.

Statistics South Africa will release the data at 11.30am local time on Wednesday, 27 August.

Only one respondent saw a dip

Headline inflation — the percentage change in the consumer price index – is expected to have increased at a whopping 13.6 percent from a previous 12.2 percent; and from just seven percent a year ago.

Forecasts for CPI ranged from 12.1 percent to 14.1 percent. Only one respondent saw a dip below last month's level.

The 27.5 percent increase in electricity prices was expected to generally take effect from July, while higher petrol prices in July are seen as contributing to the large rise in consumer inflation, but the good news is many analysts now believe the inflation peak is nigh.

Analysts at the upper end of the CPIX survey range — 13.5 percent — feel that this is the peak, as there should be signs of moderation in food and lower petrol prices ahead.

Of some concern, though, is the actual timing of the electricity tariff increases.

CPIX to peak in the third quarter of 2008

Central bank governor Tito Mboweni pointed out last week, in keeping rates unchanged at 12 percent, that CPIX inflation is expected to peak in the third quarter of 2008 at an average 13 percent.

Re-weighting and rebasing of the CPI basket is set to take effect from the January data next year — and thus be due in the end-February release — and is generally expected to bring inflation down to an extent, but it is still debatable as to exactly how much.

The annual average for CPIX was 6.5 percent in 2007 from 4.6 percent in 2006. This is from a far lower 3.9 percent in 2005 and 4.3 percent in 2004. Annual CPI was at 7.1 percent in 2007. The annual average for CPI was 4.7 percent in 2006 from 3.4 percent in 2005, compared with only 1.4 percent in 2004, which was the lowest annual average since 1958.

I-Net Bridge